What many consumers are faced with when finding alternative methods when applying for a loan is that they don’t understand what they’re looking for. Or when they think they know what they want to do, but they don’t understand what they are getting themselves into. For example, a lot of people will come to our site just to use our list of companies to compare online title loans. This list alone is not enough for most people to make a good financial decision. They must understand the concepts of what a title loan is. In the following paragraphs we’re going to breakdown many of the facets of these loans so you can make an educated decision. Our goal is that by the time you finished reading this article, you’ll understand what an auto title loan is and how you can get one.
When you search the internet for the term of what the definition of a title loan is, you’ll most likely get several definitions. But by and large, you are using the equity that you have in your vehicle to access a loan. Most title loan lenders will lend you up to 60% of the value of your vehicle. So let’s say your car is worth $12,000, you can get a loan for up to $7,200. They do this in the event that if the borrower defaults on their loan they have recourse in repossessing the car and sell the vehicle. There’s really no risk to the lender and that brings us to the next question of credit ratings. No, you don’t have to have good credit to qualify for an auto title loan. Most lenders have no interest in your credit rating because you’re using your car as collateral.
As with any loan you need to look at all the different facets of the loan before pulling the trigger. You need to see if the lender is charging an origination fee. What is the APR of the loan? What is the length of your loan? Are there prepayment penalties? These are all questions you need to have answered before you sign one of these contracts. The vast majority of auto title loans are longer terms than other loans, such as payday loans. You can always work with your lender on the duration of your loan. It may be easier for you to repay the loan over a longer time frame, but in the end you’ll be paying more in interest. Try to find a good middle ground when paying back these loans. Pay back what is comfortable for you, but don’t put yourself in a position where you’re paying far too much in interest. Only you can answer how comfortable you are with a repayment number.
As we previously mentioned, most lenders don’t care what your credit rating is. Some may not even run a credit check. They are going to use your car as collateral to let you secure a loan with them. They know that if you default on this loan they have the recourse of selling your car to make-up for the loss in revenue of the loan they provided you. These loans always come with high interest rates. Interest rates are higher on these types of loans because the lenders know that the individuals who are seeking these types of loans won’t usually qualify for a traditional loan. If there is one thing we hope you take away from reading this article is that you should try to secure other forms of financing before you use your vehicle as collateral as a loan. Exhaust those other means first and if they don’t come to fruition, then by all means apply for an online title loan.
We provide a lot of good information on our site as to what these loans are all about. Don’t feel overwhelmed in learning about them. They aren’t too complicated, but they do come with some pitfalls. They aren’t right for everyone, but there are some people out there that they are good for. But even after you’ve learned everything you need to know about these loans and figure that they are right for your unique situation, please use our site to find a reputable lender. There are predatory companies out there. When you’re applying for these loans, please look at the contract. If the lender won’t allow you to look through the contract, please find another lender to apply with. It shouldn’t cost you a dime to apply for one of these loans. But why is it important that you read the contract? First and foremost you don’t want to have to pay additional fees that you don’t need to pay. Why pay an origination fee? Why pay a fee for a credit check when the company isn’t going to run your credit? Long story short – don’t pay unnecessary fees when applying for an online title loan.